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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No320/CTK/2013 Assessment Year : 2009-10
Kendrapara Urban Co.op. Vs. ACIT Circle 1(2), Cuttack Bank Ltd.,. Main Branch, Tinimuhani Square, Kendrapara PAN/GIR No. AAATK 8347 E (Appellant) .. ( Respondent)
Assessee by : None Revenue by : Shri D.K.Pradhan, DR
Date of Hearing : 22/05/ 2017 Date of Pronouncement : 24 /05/ 2017
O R D E R Per Pavan Kumar Gadale, JM This is an appeal filed by the assessee against the order of CIT(A)-
Cuttack, dated 25.3.2013, for the assessment year 2009-10.
When the matter was called for hearing, none appeared on behalf of
the assessee nor any application for adjournment was filed. Since the
notice has been served on the assessee and the appeal relates to year
2013, we consider it appropriate to dispose of the appeal on the basis of
materials available on record and considering the submission of ld D.R.
2 ITA No. 320/CT K/ 2013 Asse ssment Year : 20 09- 10 3. The assessee has raised Ground Nos.1 & 2 in respect of issue of
notice u/s.143(2) of the Act as gross violation of provisions and illegal. We
find that this ground of appeal does not emanates out of the order of the
CIT(A) and there is no contention of the assessee on the of violation of
provisions on illegality of issue of notice before the Assessing Officer and
we treat this ground of appeal is out of purview of CIT(A)’s order and
dismiss the same.
The other grounds raised by the assessee being Ground Nos.3 to 5
are against the disallowance made by the Assessing Officer
u/s.36(1)(viia)(a) of the Act and confirmed by the CIT(A).
Brief facts of the case are that the assessee is in the business of
Banking and filed the Return of income on 29.9.2009 disclosing total
income of Rs.24,56,450/-. Subsequently, the assessee had filed revised
return on 1.2.2011. The case was selected for scrutiny under CASS and
notices u/s.142(1) and u/s.143(2) were issued to the assessee. In
compliance to the notices, ld A.R.of the assessee produced books of account
and filed written submissions and explanations and the case was discussed.
The Assessing Officer on perusal of financial statements found that the
assessee has debited several provisions in respect of provision for bad &
doubtful asset NPA of Rs.25,02,000/- and provision for recoveries of
Rs.24,87,288/-. The Assessing Officer considered the written submissions
filed by the assessee on 21.11.2011 explaining the applicability of section
36(1)(viia)(a) of the Act. Whereas the Assessing Officer perused the
3 ITA No. 320/CT K/ 2013 Asse ssment Year : 20 09- 10 provisions and came to the conclusion that the provisions of bad and
doubtful debts in respect of scheduled bank or non-scheduled bank or co-
operative bank is allowed 7.5% of total income and made a calculation at
para 2.2 of the assessment order and unilaterally concluded that the
assessee has availed these deductions in the immediately preceding
financial year. Therefore, the assessee should be allowed only provision
for bad and doubtful debts to the extent of Rs.5,68,330/- and disallowed
the claim of Rs.51,62,958/- and passed order u/s.143(3) of the Act on
23.12.2011.
Aggrieved by assessment order, the assessee has filed an appeal
before the CIT(A). In the appellate proceedings, the ld A.R. of the argued
and reiterated the submissions made before the Assessing Officer whereas
the CIT(A) considered the ground and dealt on the disputed issues based
on the findings of the Assessing officer and contention of the assessee and
observed that the population of Pattamundai Branch is 32724 which is
exceeding 10,000. Ld CIT(A) also perused the final audit report of the
assessee for the year 2008-09 in respect of business activity and observed
that the case of the assessee does not fall under the purview of section
36(1)(viia). He also relied on the CBDT circular page 4 of the impugned
order. Since the population of the branch is exceeding more than 10,000
in the rural branch, the assessee is not entitled for deduction for claim of
provisions of bad and doubtful debts of Rs.25,02,000/- and also there is no
technical report of provision for recoveries of Rs.24,87,288/- whereas the
provisions are to be deal with as per the accounting Standard issued by
4 ITA No. 320/CT K/ 2013 Asse ssment Year : 20 09- 10 ICAI. With these observations, the CIT(A) confirmed the addition made by
the Assessing Officer and partly allowed the appeal.
Aggrieved by the said order of the CIT(A), the assessee has filed an
appeal before us. Since none appeared on behalf of the assessee, we heard
ld D.R. in respect of provisions of section 36(1)(viia)(a) whereas the
Assessing Officer has made the addition based on the violation of provisions
of section and claims made in preceding financial year and prayed for
dismissal of the appeal of the assessee.
We have considered the findings of the Assessing Officer and
submissions of ld D.R on the grounds raised before us. We find on perusal
of the impugned appellate order that the CIT(A) has dealt the disputed
issue on a different perspective of population of the rural branch, which
exceeded 10,000. The Ld CIT(A) has exhaustively dealt on the circular of
CBDT and judicial decision on the advances of rural banking and finally
concluded that the assessee has not complied with the conditions and relied
on the Audit report irrespective of the fact that there is no remand report
nor any findings of the Assessing Officer regarding population of rural
branch in the assessment proceedings. We find that this important aspect
was not discussed or any iota of findings in the assessment order. We
considering the apparent facts and material on record are of the view that
the CIT(A) has dealt the issue on a different footing other than the findings
given by the Assessing officer. Though the powers of the CIT(A) are co-
terminus with that of the Assessing Officer, since the assessee being a co-
5 ITA No. 320/CT K/ 2013 Asse ssment Year : 20 09- 10 operative bank and its activities are mainly financing the farmers in the
rural areas, we in the interest of justice, set aside the order of the CIT(A)
and remit the entire disputed issues to the file of the Assessing Officer to
examine the deduction claimed as per the provisions of section
36(1)(viia)(a) of the Act and decide afresh. Further, the assessee should
be provided adequate opportunity of hearing and shall co-operate in
submitting the information.
In the result, appeal filed by the assessee is allowed for statistical
purposes.
Order pronounced in the open court on 24 /05/2017 in the presence of parties. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 24 /05/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Kendrapara Urban Co.op. Bank Ltd.,. Main Branch, Tinimuhani Square, Kendrapara 2. The Respondent. ACIT Circle 1(2), Cuttack 3. The CIT, Cuttack 4. Pr.CIT, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//
SR.PRIVATE SECRETARY ITAT, Cuttack